German property prices to rise by up to 4% in 2016:Experts

BERLIN: Property prices in Germany will rise between three and four percent this year, despite increased construction activity, a survey of Landesbausparkassen (LBS) building societies published on Tuesday showed.

Cheap financing costs, rising wages and low unemployment are fuelling rising demand for property, according to the survey, as well as high immigration.

"The good news is that construction activity is reacting and promises some relief in the future," said LBS director Axel Guthmann, adding that building permits hit a 15-year-high in 2015.

"However, German citizens will have to adjust to a further increase in prices for the time being," he said.

Property is most expensive in Bavaria with a detached family house in the leafy Munich suburb Gruenwald costing around 1.55 million euros ($1.80 million), while the lowest prices are in towns in east Germany, the survey found.

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The unused Input Tax Credit (ITC) on goods and services lying with the property developers as on March 31 will be reversed for under-construction properties since the ITC stands to lapse from April 1 for such houses.